Jim Chalmer’s call-to-arms to private sector, as Labor woos first homebuyers

Jim Chalmers’ budget next week will include bullish forecasts around dwelling and business investment, as the government expands its housing plan to $33bn in a bid to woo first-home buyers.

Treasurer Jim Chalmers and Prime Minister Anthony Albanese at the Logan disaster management centre in then storm-threatened metropolitan Brisbane. Picture: Tertius Pickard/Getty Images

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Jim Chalmers’ fourth budget will include bullish forecasts around dwelling and business investment growth as the government issues a clarion call for the private sector to drive the economy and expands its housing plan to $33bn in a move to woo first-home buyers.

Amid scepticism from business leaders about public funding crowding out the private sector, The Australian understands Treasury will predict a pick-up in private final demand driven by growth in consumption, dwelling and business investment.

In his election-eve budget on Tuesday, Dr Chalmers is preparing new announcements that will underpin Labor’s medium-to-long-term investment strategy anchored by Anthony Albanese’s Future Made in Australia vehicle.

On top of the budget’s focus on health and cost-of-living, including the expected extension of ­energy rebates for another 12 months, the government will ramp up its housing agenda through an additional $800m to expand the Help to Buy program from $5.5bn to $6.3bn over four years.

Labor will also spend $54m to support the development of prefabricated and modular houses, which at scale could deliver homes up to 50 per cent faster than traditional construction.

While the Treasurer has flagged some election campaign announcements will not be ­unveiled on budget night, The Australian understands the government is preparing a centrepiece that could focus on bolstering the Prime Minister’s universal childcare pledge.

Amplifying comments he made to a Business Council of Australia dinner in February, Dr Chalmers said on Friday that “our economy is at its best when it’s the private sector powering growth and propelling us forward”.

“It’s been really heartening to see private sector momentum gathering pace,” the Treasurer said. “We saw in the national ­accounts that the private sector was reclaiming its rightful place as the primary driver of activity and that’s really welcome.

“We’ve seen private business investment improve since the election and we expect to see growth continue into the future.”

The government, which has ­directed much of its funding support into health, childcare, aged care, defence and frontline services while seeking to curb spending on the NDIS, believes that settings are ripe for the private sector to ramp up investment across the economy.

Dr Chalmers is framing the budget around: responsible economic management; driving growth and productivity; lowering debt; banking savings; and providing short-term and targeted cost-of-living relief.

As Labor and the Coalition clash over competing election policies to reverse the housing crisis, the government on Saturday will announce two budget measures aimed at helping young Australians into homes and supporting Mr Albanese’s target of building 1.2 million new homes by mid-2029.

In a pitch to younger voters weeks before the May election, the government is increasing ­income and property price caps to remove barriers, particularly in the capital cities, for first homebuyers seeking to access Labor’s Help to Buy program.

The scheme, which is expected to be open for applications later this year after it was delayed in the parliament, will increase income caps from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents.

Property price caps have been lifted in line with average house prices in each state and territory rather than dwelling prices. The updated price caps are $1.3m in Sydney, $1m in Brisbane, $950,000 in Melbourne, $900,000 in Adelaide and $850,000 in Perth.

Under the scheme, which ­requires participants to have a minimum 2 per cent deposit, the commonwealth provides first homebuyers with an equity contribution of up to 30 per cent for an existing home and 40 per cent for a new home.

Housing Minister Clare O’Neil said changes to the scheme, which has 40,000 places over four years and is capped at 10,000 places a year, means that “three-quarters of first homebuyers are now eligible”.

“The changes in property price caps mean that five million homes around the country are now within reach of people who are working through the scheme,” Ms O’Neil said.

“I think this scheme is going to be hugely popular. I think it’s going to be a mainstay of Australian housing policy. The simple reality is that more young people are going to need the support of their government and that’s what they’re getting under us.

“We’ve inherited a housing crisis that’s been a generation in the making. You have not seen a government with the ambition that we have since the post-war period. We’ve got to turn this around.”

Minister for Housing and Homelessness, Clare O'Neil, with the Prime Minister. Picture: NewsWire / Martin Ollman

Ms O’Neil said voters should not forget the Greens and ­the ­Coalition delayed the scheme by a year, which she described as “absolutely deplorable”. Labor says it has already helped 150,000 Australians buy a home with lower deposits.

The new funding in the budget includes $50m for states and territories to invest in local programs and $4m to develop a voluntary certification scheme. Ms O’Neil said “the innovators who are going to drive this change in our construction sector are already out there and producing homes”.

“What they need is government to come in behind them and to turbocharge their efforts,” Ms O’Neil said.

“We can’t afford as a country to wait five, 10 or 15 years for some of these practices to become mainstream. I understand people might have pre-existing ideas about what this kind of housing looks like but I’d encourage them to do a bit of online research. In very high-performing housing markets around the world like Sweden and Japan, a really high percentage of homes are constructed using these technologies.

“This is absolutely a part of the answer to Australia’s housing ­crisis. Our government is trying to build more homes, more quickly and this kind of technological ­advancement is going to help us do it.”

Amid warnings Labor will not hit its 2029 new homes target, Ms O’Neil said: “We need to expand the capacity of Australia’s construction sector … we need wholesale scale fast.”

Jim Chalmers in Brisbane this week. Picture: NewsWire/Tertius Pickard

Ahead of Tuesday’s budget, Dr Chalmers said “our economic plan is all about supporting and incentivising the private sector” through national competition policy, productivity measures, support for small businesses and Future Made in Australia investments.

Dr Chalmers, who is not claiming mission accomplished in relation to inflation and cost-of-living pressures, said “our economy has turned a corner but we recognise that people and businesses are still under the pump”.

“Under Labor, inflation is down, incomes are strengthening, unemployment is very low, interest rates are coming down, business investment has picked up and now growth is rebounding solidly as well and the private sector is an important part of the story,” he said.